Economic and environmental impacts of agricultural non-tariff measures: evidence based on ad valorem equivalent estimates

Abstract

Non-tariff measures as hidden barriers to agricultural trade would not only result in production and welfare distortions due to the international relocation of activities along the agricultural value chain, but also yield subsequent consequences to both the scale and distribution of carbon emissions from the agri-food system. This paper estimates ad valorem equivalents of non-tariff measures using a gravity model in combination with detailed bilateral trade data of 2001-2019, and incorporates the estimations in the Global Trade Analysis Project model and a multi-regional input-output table of Eora26 to quantify economic and environmental impacts of non-tariff measures. We show that while tariff equivalents are on average positive for all types of non-tariff measures, there are substantial heterogeneities across countries and products. The extra trade barriers imposed by these measures would increase the scale of domestic agriculture-related sectors for most agriculture importing countries, and vice versa for major exporters. Meanwhile, they would reduce the global welfare at amount of 16 millions US dollars on average and in particular, the welfare of key imposers and targeting markets of non-tariff measures. Carbon emissions from the agri-food system tend to increase about 1% around the world, especially due to the larger food processing industry in developed countries. Our paper confirms that non-tariff measures lead to both welfare distortions and carbon emissions in the agri-food system. It thus calls for urgent needs to promote further reforms of the agricultural trade regime and the policy coordination across countries to facilitate agri-food system transformation with more integration and sustainability.